Noel Dempsey (Meath West, Fianna Fail)

The Government will seek to ensure that connectivity at Irish airports is maintained and developed through the continued implementation of its aviation strategy, which is to promote the development of as wide a range as possible of competitive international air services to and from Ireland to underpin our economic growth and competitiveness.

We need regular, safe, cost-effective and competitive air services linking the country to key business and tourism markets around the world. To this end, within the European Union, Ireland has consistently supported market liberalisation measures which have served as the platform for the rapid expansion of aviation generally. We have also promoted liberalisation on a wider basis, most recently in pressing for the conclusion of the EU-US open skies agreement and in concluding a more liberal agreement on a bilateral basis with Canada.

I should add that our approach to the encouragement of air services is complemented by our policy on the development of airport infrastructure within the country. The main objective is to ensure that the three State airports have sufficient capacity to respond to the growth opportunities of a competitive airline sector and to provide vital international access. In addition, the six regional airports have a key role to play in promoting regional development.

It is open to each airport authority to introduce incentive schemes to attract new business, subject to EU competition and state aid rules. I welcome the initiative taken by the Shannon Airport Authority to introduce a new hub airport incentive scheme to encourage airlines to commence new services to and from Shannon, including Shannon to Heathrow.

I have decided to appoint two further directors to the board of Aer Lingus. I will ask the State appointees to seek to ensure that all future decisions of the company that have significant implications for wider Government aviation or regional development policies are considered at board level. That will give the State appointees the opportunity to raise the public policy implications of each decision and to ensure the full commercial implications for the company are taken into account. The State appointees to the board do not, nor will they, have a veto on board decisions. All directors, including the State appointees, will be bound by their fiduciary responsibilities under the Companies Acts.

Additional information not given on the floor of the House.

Under company law it is not possible for the State or any other shareholder to overturn a decision taken by the company on day-to-day business matters. The legal advice to the Government has been clear and unequivocal. Neither is it possible for the State to avail of its shareholding to seek to impose non-commercial obligations on the company. By appointing our full board complement it will be possible to seek to ensure that the full ramifications of all significant strategic decisions are fully discussed by the board.

The appointment of these extra directors would not have changed the decision on the Shannon to Heathrow service. The board gave the management a mandate to pursue all commercial opportunities for the airline. On foot of this mandate, management decided to discontinue the service between Shannon and Heathrow. It did not have to get the further approval of the board. The appointment of two extra directors would not have made any difference to this decision. Even if board approval was a requirement, the emphasis that the company has put on the commercial advantages of Belfast over Shannon suggests that a better understanding of the wider implications for the Shannon region and wider commercial issues for the company would not have tipped the balance in this case.

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